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Arbitrage: How the Government Helped Frequent Fliers Make a Mint

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  • #1

    Arbitrage: How the Government Helped Frequent Fliers Make a Mint

    Brilliant.

    http://online.wsj.com/article/SB1260...s_Most_Popular

    "
    Enthusiasts of frequent-flier mileage have all kinds of crazy strategies for racking up credits, but few have been as quick and easy as turning coins into miles.
    At least several hundred mile-junkies discovered that a free shipping offer on presidential and Native American $1 coins, sold at face value by the U.S. Mint, amounted to printing free frequent-flier miles. Mileage lovers ordered more than $1 million in coins until the Mint started identifying them and cutting them off.
    Coin buyers charged the purchases, sold in boxes of 250 coins, to a credit card that offers frequent-flier mile awards, then took the shipments straight to the bank. They then used the coins they deposited to pay their credit-card bills. Their only cost: the car trip to make the deposit.
    ...

    He says his largest single deposit was $70,000 in $1 coins. He used several banks and numerous credit cards. He earned enough miles to put him over two million total at AMR Corp.'s American Airlines, giving him lifetime platinum-elite status -- early availability of upgrades for life and other perks on American and its partners around the world. He also pumped miles into his account at UAL Corp.'s United Airlines and points into his Starwood Preferred Guest program account.

    ..."
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  • #2
    Re: Arbitrage: How the Government Helped Frequent Fliers Make a Mint

    While the mechanism is real, the specific story is likely at least slightly embellished.

    The simple logistics of it make even 1 million miles gained via $35K or less increments problematic.

    American Airlines frequent flyer program is also somewhat unusual in that it counts any mile earned as a 'program mile'.

    United, in contrast, only counts BIS (Butt In Seat) miles.

    Lifetime Exec. Platinum though - nothing to sneeze at.

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    • #3
      Re: Arbitrage: How the Government Helped Frequent Fliers Make a Mint

      I'm sure that it was slightly embellished, doesn't take away from how cool this small arb is though. People with time may have been willing to take order of and undertake 14-30 trips to the bank.

      At minimum, it reminds us all that we should always be looking to think outside of the box.

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      • #4
        Re: Arbitrage: How the Government Helped Frequent Fliers Make a Mint

        The US Mint one was good, but the Amtrak one was better

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        • #5
          Re: Arbitrage: How the Government Helped Frequent Fliers Make a Mint

          I am thinking that they would have been better off to keep the coins for the metal content in anticipation of POOM.

          Comment

          • #6
            Re: Arbitrage: How the Government Helped Frequent Fliers Make a Mint

            The Mint says it costs, on average, about $3 to ship each 250-coin box. So $10,000 in coins would be 40 boxes, or $120 in shipping. As for credit-card costs to the government, a Treasury Department agency handles all government credit-card transactions and negotiates costs. No particular credit-card expense is charged to the Mint, a spokesman says.


            Huh. So treasury foots the bill on the CC charge? I'm sure they don't pay the post office either.

            Move to the Rant & Rave thread you can't make this up.

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            • #7
              Re: Arbitrage: How the Government Helped Frequent Fliers Make a Mint

              Originally posted by cjppjc View Post
              The Mint says it costs, on average, about $3 to ship each 250-coin box. So $10,000 in coins would be 40 boxes, or $120 in shipping. As for credit-card costs to the government, a Treasury Department agency handles all government credit-card transactions and negotiates costs. No particular credit-card expense is charged to the Mint, a spokesman says.


              Huh. So treasury foots the bill on the CC charge? I'm sure they don't pay the post office either.

              Move to the Rant & Rave thread you can't make this up.
              This arbitrage is real. The mint covers shipping on it. I looked into it a few months ago and figured the time invested in ordering, ensuring delivery, and going to the bank multiple times to lug around dollar coins wasn't worth it for me. I would have used an American Express Blue which gets 1.25%. It might make sense for some depending on individual circumstances.

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              • #8
                Re: Arbitrage: How the Government Helped Frequent Fliers Make a Mint

                Originally posted by Jay View Post
                This arbitrage is real. The mint covers shipping on it. I looked into it a few months ago and figured the time invested in ordering, ensuring delivery, and going to the bank multiple times to lug around dollar coins wasn't worth it for me. I would have used an American Express Blue which gets 1.25%. It might make sense for some depending on individual circumstances.

                My point was how much money the mint is spending to get these coins into circulation

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                • #9
                  Re: Arbitrage: How the Government Helped Frequent Fliers Make a Mint

                  I dunno if it was worth it, risk versus reward. Sure he gets maybe a 1% return, but what if shipment went awry? What if someone detected the shipment and then jacked him for it?

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